Glossary

Alternative Companies List (ACL)

Alternative Companies List is a list issue by the Malta Stock Exchange providing the most recent prices and other information for companies that do not satisfy the criteria set for listing on the Official List.

At best

an instruction to a stockbroker to conduct the market transaction immediately and at the best possible price

At par

refers to the nominal value of a security

Bargain

a purchase or sale on the stock exchange

Basis point

the unit of an index. The movement of an index will be described either by percentage movement or by the change in basis points

Bear

an investor who thinks that the prices of investments are going to move downwards for one reason or another

Bear Market

a market characterised by consistent fall in share prices

Bid

the price at which an individual/institution is prepared to pay for a particular security

Bid-Offer Spread

the difference in the buying and selling price of most investments including unit trusts, and assurance funds

Blue Chip

a term used for an investment, which is quite solid and safe. Normally these are companies with big household names such as IBM and Procter and Gamble

Bond

a debt security, issued by governmental or corporate entities which in return pay out a coupon (fixed interest) to investors.

Bonus issue

is an issue of free shares to the existing shareholders of the company

Bull

an investor who thinks that prices of investments are going to move upwards

Bull Market

a market where prices are on the rise and expected to rise further

Capital Gain

the increase in price of an investment above the purchase price realised on sale of shares

Capital Gains Tax

is a tax on the net appreciation in the value of an asset. In Malta all securities are free of capital gains tax

Collective InvestmentScheme (CIS)

is a fund made up of a number of small investors and managed by an institution, which invests money in accordance with the investment criteria of the particular fund

Contract note

a written confirmation of the purchase or sale of an investment issued immediately after the deal is struck

Convertible bonds

are bonds with the rights to convert to ordinary shares or preference shares at a predetermined price and at a stated time in future

Deal

the point at which a bid and an offer are matched to form a trade

Debenture

a bond or fixed interest security issued by a company, usually secured on company's assets

Dividend

the part of a company's profits which is distributed amongst shareholders

Dividend Yield

is the dividend per share divided by the current market price of the share

DPS

Dividend per share is a ratio expressing the total amount of dividends divided by the number of ordinary shares

EPS

Earnings per share is a ratio expressing the company's earnings divide by the number of ordinary shares

Equities

the term given to investments in companyâ€™s listed on a stock exchange

Exchange rate

the price of one currency expressed in another currency. Exchange rates can be quoted direct or indirect. A direct exchange rate is expressed as, EUR/USD, where EUR0.680=USD1, whereas an indirect rate is expressed as EUR:USD, where EUR1=USD1.47.

Exchange rate risk

the potential to loose money because of a change in the exchange rate

Ex-coupon

this entitles the seller of security to keep the coupon

Ex dividend

when a dividend is quoted ex, it means that the deal carries no entitlement to the distribution of dividend

Flotation

the offering of a companyâ€™s stock to the public for the first time on a stock market

Fringe benefit

a term used when shareholders of a company receive additional benefit over and above the dividends received

Initial charges

the charges paid on investing in collective investment schemes. Normally these charges cover administration costs and commissions, which are paid by the fund manager

Initial Public Offering (IPO)

the first sale of equity by a private company to the public, sometimes also refrred to as a public flotation.

Interim statement

a financial report covering only a part of the financial year. Public companies normally issue six-month statements informing their shareholders about changes in the companyâ€™s balance sheet and profit and loss account.

Issued Share Capital

is the capital actually held by shareholders, distinct from the authorised share capital, which is the maximum amount of share capital the company can hold.

Market Capitalisation

the value of a company represented by a number by the total value of it shares. It is calculated by multiplying the number of shares in issue by the current market price.

Mutual fund

another word for unit trust, where investors pool in their money invest using the expertise of a fund manager.

Nominal value

another term for par value. This is the face value of a security, which is normally Lm100.

No-load funds

a collective investment scheme with no initial and exit charges.

Offer price

the price at which a security is offered for sale.

Official List

it is a list off all securities that trade on the Malta Stock Exchange. It provides details of dividend dates, prices, rights issue and other pertinent information attached to a particular security.

Ordinary shares

are shares in a company that normally account for the bulk of a companyâ€™s share capital.

Over subscription

is when more applications for a share issue/ offer are received than there are shares for offer.

Overvalued

is when the market prices overstate the real value of a company or market given its actual performance.

Par value

see nominal value.

Portfolio

collection of investments held by an individual, corporation or fund

Preference share

are shares in a company normally paying a fixed interest, ranking after creditors but before ordinary shareholders in the event of liquidation.

Premium

is a sum paid in addition to the market value of an asset

Price-Earnings Ratio (P/E Ratio)

analysis the market value of a share and the companyâ€™s profit. It is found by dividing the market price of a share by the earnings per share.

Put-through

a simultaneous deal effected by a stockbroker for two clients where one is selling and one is buying.

Quoted company

a company listed on the Stock Exchange.

Redeemable Preference shares

preference shares that the company has the right to redeem before a particular date.

Register

a list of holders of a security

Return on Capital Employed (ROCE)

is the pre-tax profit divided by the ordinary share capital, reserves and loan stock.

Rights issue

an invitation to existing shareholders to acquire additional holdings the respective company

Risk Profile

the different levels of losses in the money invested one is ready to accept, as the price of potentially earning higher returns.

Securities

the general term for equities, shares, stocks and debentures of all types.

Share Capital

represents the ownership of a company, as distinct from debt.

Share premium

the amount above par value that a company issues/ offers its shares for sale.

Share split

is the issue of additional shares with the aim of reducing the value of the existing shares.

Solvency ratio

a ratio used to evaluate the ability of a company to meet itsâ€™ long term obligations.

Stocks

Stocks are simply shares of individual companies. Let's say that a company has gone through its start-up phase and is now turning a profit. It may look to expand. However, it may be difficult to do so solely through their profit margin. Therefore they turn to financial markets to help them out. They split up their company into sections called 'stocks' and then sell those portions, however small, to the public. In this way a person who buys stock is actually buying a piece of the company. Stock may also be called equity.

Stockbroker

a member of the Stock Exchange licensed to deal on the market on behalf of his clients.

Subsidiary Company

a company that is the property of another company. A company qualifies as a subsidiary, providing that the holding company holds more than voting shares in the subsidiary.

Underwriter

a company that guarantees to buy all the shares in a public offering provided that they are not fully subscribed by the public.

Yield

a term used to describe the annual return from an investment.

Yield to Call (YTC)

the Yield on a bond assuming the bond will be redeemed by the issuer at the first call date specified in the indenture agreement.

Yield to Maturity (YTM)

YTM takes into account gain or losses of principal at maturity. YTM allows investors to compare bonds with different maturities that sell at a price different to par.

Yield to Worst (YTW)

YTW is the lowest yield from a corporate bond that a buyer can expect among reasonable alternatives, such as Yield to Maturity, Yield to Call and Yield to Refunding.